Turkey and Eastern Mediterranean Hydrocarbons
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TURKEY AND EASTERN MEDITERRANEAN HYDROCARBONS Ayla Gürel & Laura Le Cornu TURKEY AND EASTERN MEDITERRANEAN HYDROCARBONS Ayla Gürel & Laura Le Cornu TURKEY AND EASTERN MEDITERRANEAN HYDROCARBONS Authors: Ayla Gürel & Laura Le Cornu Design and page layout: Lenka Peťková Cover photograph: Stanislav Peťko Global Political Trends Center Publications First published: October 2013 Global Political Trends Center (GPoT Center) Istanbul Kültür University Atakoy Campus, Bakirkoy 34 156 Istanbul, Turkey Phone: +90 212 498 44 76 Fax: +90 212 498 44 05 www.gpotcenter.org © GPoT Center, 2013 All rights reserved. No part of this publicaiton may be reproduced electronically or mechanically without prior permission of Global Political Trends Center (GPoT Center) of Istanbul Kültür University. The views expressed in this book belong to the authors, and they mauy not necessarily concur partialy or wholly with those of eitehr GPoT Center or IKU. TURKEY AND EASTERN MEDITERRANEAN HYDROCARBONS Ayla Gürel & Laura Le Cornu TABLE OF CONTENTS ABOUT THE AUTHORS 1 INTRODUCTION 2 TURKEY’S INVOLVEMENT IN PREVIOUS EASTERN MEDITERRANEAN ENERGY INITIATIVES 3 TURKEY’S SEARCH FOR OFFSHORE HYDROCARBONS IN THE EASTERN MEDITERRANEAN 4 EXPLORATION AND DISCOVERIES IN THE LEVANT BASIN 4 Israel 5 Gaza 7 Cyprus 7 Lebanon 8 Syria 9 TURKEY AND EASTERN MEDITERRANEAN ENERGY PROSPECTS 9 Turkey and Cyprus 10 Political Context 10 Positions Regarding Exploration by the RoC 11 Turkey-TRNC Collaboration for Reciprocal Steps: Exploration by the TRNC 14 Turkish Cypriot Proposals for Cooperation over Offshore Hydrocarbons 15 Clash of Maritime Claims by Turkey and the RoC 15 Turkish Warnings Regarding RoC Exploration Activities and Their Security Implications 16 Turkey and Israel 18 Political Relations 18 Turkey’s Stance Regarding Israel’s Cooperation with the RoC 20 Prospects for Israeli-Turkish Energy Cooperation and Implications for Cyprus 22 CONCLUSIONS: HYDROCARBONS AS A CATALYST FOR RECONCILIATION 26 Turkey and Greece in New Energy Corridor 27 Transformative Capacity of Hydrocarbons 27 Likelihood of Cooperation in the Eastern Mediterranean Region 28 REFERENCES 31 APPENDIX – MAPS 41 1 ABOUT THE AUTHORS DR. AYLA GÜREL is a senior research consultant at the PRIO Cyprus Centre in Nicosia. Since 2005 she has worked on several research projects about the plight of displaced persons on both sides of the island and the associated question of property rights within the context of the Cyprus problem. She has numerous publications related to these topics. Gürel has also been involved in facilitating inter-communal dialogue on property issues. Her more recent research concerns the issue of hydrocarbons exploration and exploitation offshore Cyprus and more generally in the Eastern Mediterranean. She co-authored the 2013 PRIO Cyprus Centre report entitled ‘The Cyprus Hydrocarbons Issue: Context, Positions and Scenarios’. DR. LAURA LE CORNU is a senior research consultant on hydrocarbon issues at the PRIO Cyprus Centre in Nicosia. She is a former Government Affairs Analyst for ExxonMobil’s Upstream division, advising on geopolitical risk and government relations in the Caspian and Turkey. Le Cornu spent 15 years on the ground in Azerbaijan and Turkey, working on energy publications and advising blue-chip companies such as Statoil and Google on emerging political risks. Her current research work focuses on the strategic, political and economic implications of hydrocarbon development in Cyprus and the Eastern Mediterranean region. 2 INTRODUCTION With substantial gas discoveries off the coasts of Israel, and more recently, Cyprus, the Eastern Mediterranean has emerged as an important new hydrocarbons frontier. For a number of reasons, Turkey’s energy strategy, policies, and priorities will have significant impact on hydrocarbon developments in the Eastern Mediterranean. Turkey is the largest economy and domestic market for gas in the region. It has become a key transit country for the planned Southern Corridor to transport Caspian and Middle Eastern gas to Europe, and could potentially facilitate the transport of gas from the Eastern Mediterranean to European markets. However, Turkey has troublesome relations with both Cyprus and Israel – the two countries in the region with the largest proven (Israel) and potential gas reserves (Cyprus). Turkey is heavily involved as a party in the long-running Cyprus problem, supporting – including militarily – the Turkish Cypriot community against the Greek Cypriot community – the two rivals on the divided island. The discovery of gas off the coast of Cyprus by the Greek Cypriots who are at the helm of the Republic of Cyprus (RoC) has led Turkey to take determined action to support Turkish Cypriot rights to a share of hydrocarbons. At the same time, the RoC’s signing in 2003 of an EEZ delimitation agreement with Egypt sparked a new conflict over maritime borders between Turkey and the RoC. Although not of the same magnitude, Turkey’s relations with Israel had been in a crisis following the Gaza Freedom Flotilla incident in 2010, lasting until March 2013 when the two sides embarked on a difficult process of normalization. In addition, Turkish-Israeli relations have been further strained due to emerging energy cooperation between the RoC and Israel. Prompted by Israeli and RoC exploration activity, in spring 2011 Turkey’s energy minister Taner Yıldız declared that Turkey would shift its ‘strategic weight from the Black Sea to the Eastern Mediterranean’ (“Turkey, Shell”, 2011). This new strategic focus was consolidated with the signing of an exploration agreement for blocks off of Turkey’s southern province of Antalya with Shell in 2011. Over the past two decades, Turkey’s primary focus was on exploration (both independent and in cooperation with international companies) in the Black Sea and Caspian region. Additionally, Turkey has successfully positioned itself as a key transit country for Caspian oil, and now gas to international markets. As well as seeking to secure new sources of gas from the Eastern Mediterranean region to reduce dependence on Russia and Iran, Turkey views itself as a viable transit country for export of gas from the region onto Europe.1 1 Turkey imports 98% of its gas supply and is the fastest growing energy market in Europe. See Rende (2013). 2 The pipeline was conceived in 2001 and its four phases were completed and put into operation, respectively, in 2003 (from Al Arish in Egypt to Aqaba in Jordan), in 2006 (from Aqaba to Amman and then to El Rehab in Jordan), in 2008 (from El Rehab in Jordan to Homs in Syria), and in 2009 3 This article examines Turkey’s energy relations in the Eastern Mediterranean region (focusing on Cyprus and Israel), covering its energy activities before 2011, key political issues influencing hydrocarbons development, and implications for on-going disputes in the region. It begins with an overview of Turkey’s earlier energy pipeline initiatives with Arab states and Israel, followed by a summary of recent exploration and discoveries in the Levant Basin (Israel, Cyprus, Gaza, Lebanon and Syria). Next the article analyzes how the Cyprus dispute and more recent fluctuations in its relations with Israel are shaping Turkey’s energy policies in the region. It concludes by briefly exploring the extent to which the transformative capacity of hydrocarbons can play a role as an enabler for reconciliation and cooperation between Turkey, Cyprus and Israel. TURKEY’S INVOLVEMENT IN PREVIOUS EASTERN MEDITERRANEAN ENERGY INITIATIVES Turkey’s interest in energy cooperation in the Eastern Mediterranean region goes back to its decision to participate in the Arab Gas Pipeline (AGP) project. The AGP, much hailed as a strategic Arab cooperation project, exports Egyptian natural gas to Jordan, Syria and Lebanon.2 In 2008, a consensus was reached between Turkey, Iraq, the EU, and the Masreq countries (Egypt, Jordan, Syria and Lebanon) over extending the AGP to the Syrian-Turkish border (from Homs in Syria to Kilis in Turkey). The plan was to deliver gas to Turkey as well as potentially link the AGP via possible southern corridor transport routes, e.g., Nabucco, to the EU (“EU- Turkey”, 2008). The agreement also included linking Iraq to the AGP as a source of additional gas supply to Europe. Construction of the link from Syria to Kilis began in 2009 but was never completed and the project of extension of AGP to Turkey has essentially been aborted due to the uprising and civil war in Syria (U.S. EIA, 2013a). Another halted energy initiative in the Eastern Mediterranean which involved Turkey is the Med Stream pipeline project. In 2006 it was announced that Turkey and Israel agreed over the construction of a subsea multiple pipeline system that would extend from Ceyhan in Turkey to Ashkelon in Israel and carry oil, natural gas, electricity, water and fibre optic cables (“Turkey, Israel”, 2006). The plan was to connect the Med Stream pipeline via an on-land oil and gas pipeline through Israel to Eilat at the Red Sea coast from where supplies would be carried by tanker ships to India and other Asian markets (Tommer, 2009). India too was interested in participating in the project which was promising to be a cheaper and quicker transit route for oil than the way through the congested Suez Canal. 2 The pipeline was conceived in 2001 and its four phases were completed and put into operation, respectively, in 2003 (from Al Arish in Egypt to Aqaba in Jordan), in 2006 (from Aqaba to Amman and then to El Rehab in Jordan), in 2008 (from El Rehab in Jordan to Homs in Syria), and in 2009 (from Homs in Syria to Tripoli in Lebanon). Another pipeline branching off from the AGP and linking El Arish to Ashkelon in Israel started operating in 2008 and, until it was shut down in April 2012, supplied Israel with Egyptian gas. 4 However, the project could not progress much after Turkish-Israeli relations started deteriorating from 2009 onwards.